Page 172 - Global Political Economy_Understanding The International Economic Order

SYS TEMS O F POLI TICAL ECONO MY
War II, the ruling tripartite alliance of government bureaucracies, the
governing Liberal Democratic Party (LPD), and big business began to
pursue vigorously the goal of catching up with the West. To this end,
the elite pursued rapid industrialization through a strategy employing
trade protection, export-led growth, and other policies. The Japanese
people have supported this extensive interventionist role of the state
and believe that the state has a legitimate and important economic
function in promoting economic growth and international competi-
tiveness. The government bureaucracy and the private sector, with
the former frequently taking the lead, have consistently worked to-
gether for the collective good of Japanese society.
To attain the goal of rapid industrialization, the Japanese state sup-
ported, or even created, certain social characteristics, including an
industrious and highly educated workforce. In many ways, the Japa-
nese state created today’s Japanese society. 15 Japan’s postal savings
institution fostered an extraordinarily high savings rate. Because of
strict capital controls for much of the postwar era, the postal service
was able, while paying depositors just a minimal rate of interest, to
make these savings available for loans to Japanese firms; such finan-
cial assistance significantly reduced the cost of capital and contributed
importantly to the rapid industrialization of the country and to inter-
national competitiveness. The Japanese state has also unfortunately
played an important role in supporting social, political, and legal as-
pects of Japanese society that made it inhospitable to foreign direct
investment and to the importation and consumption of foreign
goods. 16 Fortunately, since the mid-1990s, this situation has been
changing.
The unusual independence and power of the government bureau-
cracy accompanied by bureaucratic fragmentation within the govern-
ment provide yet another distinctive aspect of the Japanese state that
sets it apart. The economic and other bureaucracies of the govern-
ment are virtually independent fiefdoms. With few major exceptions,
each bureaucracy represents a particular segment of Japanese society
and believes that it has a responsibility to promote the interests of
that group. There are frequent disputes among agencies over policy
and jurisdictional responsibility; these have increased as new technol-
ogies and economic developments have spread across the traditional
functions of government agencies. Chalmers Johnson has made the

15
The central role of the Japanese state in the formation of the Japanese economy
and economic psychology has been demonstrated by Sheldon Garon, Molding Japanese
Minds: The State in Everyday Life (Princeton: Princeton University Press, 1997).
16
Edward J. Lincoln, Japan’s Unequal Trade (Washington, D.C.: Brookings Institu-
tion, 1990).
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